The ANC tax scandal is a far bigger deal than has been reported so far. If any other company or organisation had collected millions in PAYE contributions from its employees and then withheld this money from SARS, they’d be in court quicker than you can say “it’s the right thing to do”. Yet the party of government has been doing exactly that, while simultaneously guilt-tripping citizens into tax compliance.
Paying tax – and particularly paying South Africa’s exceptionally high tax rates – is the ultimate grudge spend. No one wants to do this, not even our self-styled socialists in red. It’s one thing to part with a third or more of your earnings if you can actually see this money reaching its intended target. But it’s an entirely different proposition to dutifully hand it over, and then see a massive chunk of it either wasted on government excess, badly spent or just plain stolen.
Taxpayer frustration is slowly but surely morphing into taxpayer anger, and every year the mutterings of tax revolts get louder and louder. Yet it seems that government is largely oblivious to this pressure cooker situation. Aside from the large amounts looted or misspent every year, the smaller but highly visible amounts blown on material trappings such as luxury cars, house upgrades, fancy hotels, travel and VIP protection points to a government with a massive blind spot.
Year after year SARS runs ad campaigns imploring South Africans to do their patriotic duty and pay their taxes. These campaigns have used every kind of messaging, from instruction and sermon to heartfelt appeals, citing the many worthy projects funded by tax revenue. Over the past decade we have seen one emotive campaign after another, with titles like “Touching Lives” and “Your Tax Matters”, reminding us that the massive social spend that millions rely on is only possible if we all do our bit.
No one disagrees with this, yet almost every taxpayer resents parting with his or her money. Up until now this resentment has stemmed from what government does with all that hard-earned income it collects from you – from its waste, its inefficiency and its greed. But now there’s a whole other angle to this resentment, and that is the fact that the governing party itself is a massive tax cheat. Not only does it misappropriate the money it collects from you – which includes continued salary payments to its corruption-accused MPs who have “stepped aside” – it also doesn’t pay its own share.
According to reports, an amount of R80 million in PAYE tax, dating back to 2017, was owed by the ANC to SARS. This money was deducted from ANC employees’ salaries but never paid over to the tax collector. SARS is now trying to recover the money, and a bill of R17 million taken from the party’s IEC allocations has led to the late payment of April salaries and warnings that this could be the case for the next six months. Some of the chickens are clearly coming home to roost, but it is critical that every cent of this money is recovered.
The matter is a big test for SARS Commissioner, Edward Kieswetter. When asked last week in the Standing Committee on Finance by DA Shadow Finance Minister, Geordin Hill-Lewis, whether there is any political pressure on him to go easy on the ANC, Kieswetter solemnly promised that this is not the case. “I can give the assurance that I will not tolerate any political interference. I would rather resign than comply with any political request,” he said.
All eyes are now on him and how he handles this case as it could have far-reaching implications for future tax compliance in South Africa. But not only this case. It also emerged this week – in an answer by Finance Minister, Tito Mboweni, to a DA parliamentary question – that the taxi industry contributed a mere R5 million in corporate income tax last year, despite its revenue for the year being estimated at around R90 billion. This means that most taxi operators are declaring no income at all and paying no income tax for their employees. This, too, is fraud. If Mr Kieswetter wants to prove that he is immune to political pressure, he needs to go after this industry too.
However, recovering the outstanding money is all good and well, but that’s not all that should happen here. In the case of the ANC it is almost certain that it broke the law. It is a criminal offence, in terms of the Tax Administration Act, to withhold money owed to SARS without justification. An offence that is punishable by prison time. If the ANC acted negligently or fraudulently, it is liable for the tax debts of its employees. The taxi industry’s under-declaration and tax evasion is also a crime under the Tax Administration Act.
They are no different to any other employer, and the consequences – both financial and legal – should be no different. If you and I and every other South African citizen must pay our taxes or face the law, then so should the ANC and its allies. Equality before the law is a fundamental requirement to build a functional, prosperous society. It is one of the Democratic Alliance’s core principles, and an issue on which there is miles and miles of clear blue water between the DA and the ANC.